Daniel Drezner has "decidedly mixed feelings" about the US government's "policy" of letting the dollar weaken with respect to other currencies. I wonder how he felt three years ago about the government's "policy" of letting the stock market "weaken" with respect to US currency, or three months ago about its "policy" of letting oil prices "strengthen" during the run-up to the war in Iraq.

As Morgan Stanley's Stephen Roach has been pointing out for months now, there are deep global economic imbalances that point inexorably in the direction of a lower dollar. The only question is whether the dollar's decline will be relatively orderly, as it has been so far, or catastrophic, like the currency crashes felt by many developing countries in 1998. The best way to ensure the latter outcome would be for the government to embrace the fiction that the dollar's relative value is determined primarily by government policy, and therefore to make a series of inevitably feckless, short-lived attempts to defend it against the insurmountable forces of global supply and demand.